Mexican president presents constitutional reforms months before leaving office

Mexico President Andres Manuel Lopez Obrador on Feb. 5 presented a set of reforms to the country's constitution in many sectors including energy, only months before leaving office.

Although the president's Morena party and its allies in Congress do not have enough votes to modify the constitution now, as such changes require a two-thirds majority, the move has been closely watched as a potential carryover from this administration to that of his successor. Mexico is set to hold presidential elections on June 2 with the candidate from the Morena party, Claudia Sheinbaum, leading the polls.

Lopez Obrador presented modifications to the constitution to return it to a state similar to before the liberalization of the energy sector in 2013. The modifications include the elimination of independent bodies such as the National Hydrocarbons Commission and the Energy Regulatory Commission, reforms to the judicial system and a change in the legal nature of state utility CFE so it no longer seeks profits, just meets the interests of the nation.

The Supreme Court in Mexico recently rebuffed modifications to the legal framework of the power market, which were similar to the constitutional modifications presented Feb. 5. The changes blocked by the court were proposed by the presidency and approved by Congress in 2021. The move by the court was criticized by Lopez Obrador, who said it served as an example of sequestration.

Observers criticized the president's intentions to modify the constitution again; in 2022 the president and his party tried to m{dify the constitution to benefit the state utility CFE, but opposition lawmakers blocked the move.

Severo Lopez Mestre, managing partner at Mexico-based consultancy Galo Energy, said in a social media post that reality is changing faster than regulation and the discussion is no longer whether power is publicly or privately produced. The challenge posed by energy transition is such that cooperation is essential, and regulation that introduces a "closed" architecture is set for failure, Lopez Mestre said.

Xóchitl Gálvez, the main opposition candidate ahead of the June elections, on Feb. 5 said during a presentation at the Wilson Center that the attack on the institutions by Lopez Obrador has hurt the business environment in the country and said that if elected, she would strengthen the rule of law to protect investments.

Gálvez has openly suggested that Mexico's state oil and gas company Pemex partner with the private sector and diversify its portfolio.

Lopez Obrador claims that the liberalization set forth by the neoliberal governments that ruled Mexico for decades put the interest of local and foreign companies ahead of the public interest and that if his government had not acted, the role of CFE in the national power market would now be marginal. Lopez Obrador has repeatedly noted how countries around the world which have given too much power to private energy companies have suffered high prices and shortages in extreme market conditions. His view is that only a strong state company can guarantee reliability in service and affordable prices for the broad population.